PepsiCo Inc (NASDAQ:PEP) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 07:45 am ET

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PepsiCo Inc (NASDAQ:PEP) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to PepsiCo's Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] Today's call is being recorded and will be archived at www.pepsico.com.

It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations. Mr. Pamnani, you may begin.

Executive
Ravi Pamnani

Thank you, operator, and good morning, everyone. I'm joined this morning by PepsiCo's Chairman and CEO, Ramon Laguarta; and PepsiCo's Vice Chairman and CFO, Hugh Johnston. We'll begin with some brief prepared comments from Ramon and Hugh, and then open up the call to your questions. Before we begin, please take note of our cautionary statement. We will make forward-looking statements on today's call, including about our business plans and 2020 guidance. Forward-looking statements inherently involve risks and uncertainties and reflect our view as of today, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to today's earnings release and 10-K available on pepsico.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements.

And finally, as disclosed in our earnings release this morning, we are now reporting four international divisions versus three previously. This reflects changes made to our management reporting structure. Therefore, certain international division results have been restated for the full years 2017, 2018 and 2019. Specifically, our former Europe Sub-Saharan Africa division has been reclassified as Europe and will no longer include Sub-Saharan Africa. And our former Asia, Middle East, North Africa division has been reclassified into two divisions: Africa, Middle East, South Asia, or AMESA; and Asia Pacific, Australia, New Zealand, China, or APAC. There are no changes to the remaining divisions or our consolidated results.

And now it's my pleasure to introduce our Chairman and CEO, Ramon Laguarta.

Executive
Ramon Luis Laguarta

Thank you, Ravi, and good morning, everybody. Approximately about a year ago, we embarked on a plan to make PepsiCo Faster, Stronger and Better. We've made very good progress against these initiatives, and I'm pleased to report that we met or exceeded each of the full year financial targets that we communicated to you about a year ago. Most notably, organic revenue growth accelerated to 4.5% in 2019, our fastest rate of growth since 2015. Our organic revenue growth was very broad-based across all divisions, with Frito-Lay delivering its fastest rate of growth since 2013 and PBNA delivered its fastest rate of growth since 2015. Our developing and emerging markets also delivered high single-digit growth despite ongoing volatility and uncertainty in certain parts of the world. We invested in becoming Faster by increasing our global advertising and marketing spending by more than 12% for the full year, reflecting investment across snacks and beverages, and in both our large and established brands and our emerging brands; expanding our market presence by increasing route capacity, adding merchandising racks and coolers and advancing the technologies that we deploy